Spanish Home Sellers Cut Asking Prices After New Bank Rules Are Passed

By Sharon Smyth -
Feb 16, 2012

A decree that forces Spanish (BBVA) banks
to make provisions for losses related to real estate had the
“immediate´´ effect of lowering asking prices for residential
properties, according to a study by Idealista.com, Spain´s
largest property website.

A total of 10,654 homeowners who use the website reduced
asking prices in the seven days after the Feb. 3 decree, a 30
percent increase from the weekly average in the four weeks
prior, Idealista said in an e-mailed statement.

Sellers lowered asking prices by an average of 9.5 percent,
erasing a total of 279 million euros ($363 million) from their
overall value, according to the statement.

“We knew that home prices would continue to fall this year
but that the velocity of the decline would be set by banks,´´
said Fernando Encinar, co-founder of Idealista.

Banks have taken on hundreds of thousands of properties
through foreclosures and canceling loans to developers. They
have a year to make about 50 billion euros of provisions against
real estate, according to a decree passed by the Spanish Cabinet
earlier this month. Economy Minister Luis de Guindos said on
Feb. 2 the measures would prompt a decline in home prices.

“Individual homeowners are changing their mentality and
are prepared to take less money now than face a greater loss in
the future,” Encinar said.